|STFCL – SRTO Trust 2012
||Series A PTCs
||Credit Opinion of ‘CRISIL BBB(SO) Equivalent’
#Actual tenure will depend on the level of prepayments in the pool and the exercise of clean-up call option
*Additional scheduled excess interest spread, amounting to around Rs.59.0 Million (assuming zero prepayments), provides credit support to the acquirer payouts
$Includes second-loss facility of Rs.28.0 Million
CRISIL has assigned its ‘CRISIL AAA(SO)’ rating to the Series A pass-through certificates (PTCs) issued by STFCL - SRTO Trust 2012 and has assigned its credit opinion of ‘CRISIL BBB(SO) Equivalent’ to the second-loss facility. The PTCs and the second-loss facility are backed by receivables arising from a pool of new and used commercial vehicles (CVs) and passenger vehicle loans originated by Shriram Transport Finance Company Ltd (STFCL; rated ‘CRISIL AA/FAA+/Stable/CRISIL A1+’).
The rating and credit opinion are based on the credit quality of the pool cash flows, STFCL’s origination and servicing capabilities, credit-cum-liquidity enhancement and payment mechanism, and soundness of the transaction’s legal structure.
The transaction is structured at ‘par’. STFCL will assign the pool to the trust, which will pay a purchase consideration equal to the pool principal balance at the time of assignment. The PTCs receive support from the stipulated cash collateral and the excess interest spread (subordinated to the Series A PTCs).
About the Pool
The pool consists of both new and used vehicle loans; at least one monthly instalment has been paid for each of the loans. The seasoning of the pool is low, with a weighted average net seasoning of 2.8 months. The pool is geographically diversified, with the top three states in the pool together accounting for 50.3 per cent of its principal. 85.6 per cent of the receivables in the pool are from contracts current on payment as on pool cut-off date with a weighted average loan-to-value (LTV) of 68.7 per cent and moderate ticket size of Rs. 0.12 million.
CRISIL has outstanding ratings/credit opinions on over 20 securitisation/assignment transactions backed by vehicle and construction equipment loan receivables originated by STFCL till date. The performance of all the pools is in line with CRISIL’s expectations.
About the Originator
STFCL, incorporated in 1979, is a part of the Shriram group of companies. The company is registered with the Reserve Bank of India as a deposit-taking, asset-financing, and non-banking financial company. STFCL predominantly finances purchase of CVs (both used and new), although it has also started financing purchase of tractors, passenger vehicles, earth-moving equipment, and large agricultural equipment, among others. The company has a pan-India presence, with 498 branches as on December 31, 2011.
For 2010-11 (refers to financial year, April 1 to March 31), STFCL reported a total income and a profit after tax (PAT) of Rs.54.3 billion and Rs.12.3 billion, respectively, against Rs.45.0 billion and Rs.8.7 billion, respectively, for 2009-10. For the nine months ended December 31, 2011, STFCL reported a total income and a PAT of Rs.44.0 billion and Rs. 9.5 billion, respectively, against Rs.40.1 billion and Rs.8.9 billion, respectively, for the corresponding period of the previous year.